Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc.

• Decision Date: 20 February 2015
• Docket Number: 12–17519,13–15473.,12–17595,Nos. 12–17502,13–15407,s. 12–17502
• Citation: 778 F.3d 1059,113 U.S.P.Q.2d 1883
• Parties: FIFTY–SIX HOPE ROAD MUSIC, LTD. ; Zion Rootswear, LLC, Plaintiffs–Appellees, v. A.V.E.L.A., INC. ; X One X Movie Archive, Inc.; Central Mills, Inc. (Freeze); Leo Valencia, Defendants–Appellants, and Jem Sportswear, Defendant. Fifty–Six Hope Road Music, Ltd. ; Zion Rootswear, LLC, Plaintiffs–Appellees, v. A.V.E.L.A., Inc. ; X One X Movie Archive, Inc.; Central Mills, Inc. (Freeze); Leo Valencia, Defendants, and Jem Sportswear, Defendant–Appellant. Fifty–Six Hope Road Music, Ltd. ; Zion Rootswear, LLC, Plaintiffs–Appellants, v. A.V.E.L.A., Inc. ; X One X Movie Archive, Inc.; Central Mills, Inc. (Freeze); Leo Valencia; Jem Sportswear, Defendants–Appellees. Fifty–Six Hope Road Music, Ltd. ; Zion Rootswear, LLC, Plaintiffs–Appellees, v. A.V.E.L.A., Inc. ; X One X Movie Archive, Inc.; Leo Valencia, Defendants–Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

778 F.3d 1059

113 U.S.P.Q.2d 1883

FIFTY–SIX HOPE ROAD MUSIC, LTD. ;

Zion Rootswear, LLC, Plaintiffs–Appelleesv.A.V.E.L.A., INC. ;

X One X Movie Archive, Inc.;

Central Mills, Inc. (Freeze);

Leo Valencia, Defendants–Appellants

and

Jem Sportswear, Defendant.

Fifty–Six Hope Road Music, Ltd. ;

Zion Rootswear, LLC, Plaintiffs–Appelleesv.A.V.E.L.A., Inc. ;

X One X Movie Archive, Inc.;

Central Mills, Inc. (Freeze);

Leo Valencia, Defendants

and

Jem Sportswear, Defendant–Appellant.

Fifty–Six Hope Road Music, Ltd. ;

Zion Rootswear, LLC, Plaintiffs–Appellantsv.A.V.E.L.A., Inc. ;

X One X Movie Archive, Inc.;

Central Mills, Inc. (Freeze);

Leo Valencia;

Jem Sportswear, Defendants–Appellees.

Fifty–Six Hope Road Music, Ltd. ;

Zion Rootswear, LLC, Plaintiffs–Appelleesv.A.V.E.L.A., Inc. ;

X One X Movie Archive, Inc.;

Leo Valencia, Defendants–Appellants.

Nos. 12–17502

12–17519

12–17595

13–15407

13–15473.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 8, 2014.

Filed Feb. 20, 2015.

Jill M. Pietrini (argued) and Paul A. Bost, Sheppard, Mullin, Richter & Hampton, Los Angeles, CA, for Plaintiff–Appellee/Cross–Appellant Fifty–Six Hope Road Music, Ltd.

Timothy J. Ervin (argued), Gallant & Ervin, Chelmsford, MA, for Plaintiff–Appellee/Cross–Appellant Zion Rootswear, LLC.

Michael Bergman (argued), Law Offices of Michael Bergman, Century City, CA, and Melissa W. Woo, Carlsbad, CA, for Defendants–Appellants/Cross–Appellees A.V.E.L.A., Inc., X One X Movie Archive, Inc., Central Mills, Inc., and Leo Valencia.

John Yates (argued), Greenberg & Bass LLP, Encino, CA, for Defendant–Appellant/Cross–Appellee Jem Sportswear, Inc.

Appeal from the United States District Court for the District of Nevada, Philip M. Pro, Senior District Judge, Presiding. D.C. No. 2:08–cv–00105–PMP–GWF.

Before: FERDINAND F. FERNANDEZ, N. RANDY SMITH, and MORGAN CHRISTEN, Circuit Judges.

Opinion by Judge N.R. SMITH

; Partial Concurrence and Partial Dissent by Judge CHRISTEN.

OPINION

N.R. SMITH, Circuit Judge:

1. The district court did not err by denying Defendants' post-trial motion for judgment as a matter of law on the Lanham Act false endorsement claim of Fifty–Six Hope Road Music (“Hope Road”) and Zion Rootswear, LLC (“Zion”). The jury found Appellees, A.V.E.L.A., X One X Movie Archive, Leo Valencia, Freeze, and Jem Sportswear (collectively “Defendants”), (a) used Bob Marley's image (b) on their t-shirts and other merchandise, (c) in a manner likely to cause confusion as to Plaintiffs' sponsorship or approval of these t-shirts and other merchandise. See 15 U.S.C. § 1125(a) ; White v. Samsung Elecs. Am., Inc., 971 F.2d 1395, 1400 (9th Cir.1992). Defendants waived several defenses to the Plaintiffs' claim by failing to properly raise them in the district court. See Arizona v. Components Inc., 66 F.3d 213, 217 (9th Cir.1995). Given such waivers, and without opining on the merits of those defenses, we must affirm on the basis that there was sufficient evidence to support the jury's verdict for Plaintiffs.

2. The district court did not abuse its broad discretion in determining the profits for A.V.E.L.A., Freeze, and Jem Sportwear (“Jem”). There was sufficient evidence to find Freeze willfully infringed Plaintiffs' rights, because Freeze's vice president of licensing testified that she knew that Plaintiffs had the right to merchandise Marley's image before Freeze began selling similar goods. The Seventh Amendment does not require that a jury calculate these profits, because juries have not traditionally done so, and a claim for profit disgorgement is equitable in nature. See Reebok Int'l., Ltd. v. Marnatech Enters., Inc., 970 F.2d 552, 561 (9th Cir.1992).

3. The district court did not abuse its discretion by ordering A.V.E.L.A., X One X Movie Archive, and Valencia (collectively “A.V.E.L.A. Defendants”) to pay attorneys' fees to Plaintiffs, because (1) Plaintiffs were prevailing parties, having achieved a material alteration in their legal relationship with Defendants, see Klamath Siskiyou Wildlands Ctr. v. U.S. Bureau of Land Mgmt., 589 F.3d 1027, 1030 (9th Cir.2009) ; and (2) the case was exceptional, as Defendants' conduct was willful, see Gracie v. Gracie, 217 F.3d 1060, 1068 (9th Cir.2000). Because there was less evidence of Jem's and Freeze's willfulness, the district court was also not required to order them to pay Plaintiffs' attorneys' fees.

4. We affirm the district court's grant of summary judgment to Defendants on the right of publicity claim, because Nev.Rev.Stat. § 597.800.4 and .5 unambiguously provides that a publicity right successor waives its publicity rights (and not just the right to sue a particular defendant) when it fails to timely register its rights.

5. There was sufficient evidence to support the jury's finding that A.V.E.L.A. Defendants interfered with Plaintiffs' prospective economic advantage, based on Hope Road's licensing agent's testimony that one of Hope Road's licensees lost an order intended for Walmart, because Jem sold Marley t-shirts there.

6. Finally, the district court did not err in granting Defendants' motion for judgment as a matter of law on the issue of punitive damages, because the district court's statement during trial did not contradict its later grant of the motion.

FACTS & PROCEDURAL HISTORY

Bob Marley transcended celebrity roles from pop idol to muse, championing social change and diffusing his music and message to an ever-growing audience. Even now—more than thirty years after his death—Marley's influence continues to resonate, and his iconic image to command millions of dollars each year in merchandising revenue. The primacy of rights to Marley's image forms the basis of the instant case.

Plaintiff Hope Road is an entity owned by Marley's children, formed for the purpose of acquiring and exploiting assets, rights, and commercial interests in the late Bob Marley. In 1999, Hope Road granted Zion an exclusive license to design, manufacture, and sell t-shirts and other merchandise bearing Marley's image. Hope Road authorizes Zion to use hundreds of different images of Marley on its products.

Defendants were involved with the sale of competing Marley merchandise. A.V.E.L.A. publishes and licenses photographs, images, movie posters, and other artwork for use in the retail marketplace. Defendant X One X Movie Archive holds the copyrights to these photographs, images, movie posters, and other artwork; and Valencia serves as president and CEO of both companies. In 2004, A.V.E.L.A. acquired some photos of Marley from a photographer named Roberto Rabanne. After acquiring the Marley photographs, A.V.E.L.A. began licensing them to defendants Jem and Freeze (as well as entities not a party to this suit) for the production of Marley t-shirts and other merchandise. These items were sold at Target, Walmart, and other large retailers.

On January 23, 2008, Plaintiffs filed suit against Defendants, alleging five claims arising from Defendants' use of Marley's likeness: (1) trademark infringement under 15 U.S.C. § 1114, (2) false endorsement under 15 U.S.C. § 1125(a), (3) common law trademark infringement, (4) unauthorized commercial use of right to publicity under Nev.Rev.Stat. § 597.770 et seq., and (5) intentional interference with prospective economic advantage.

The district court granted Defendants' motion for summary judgment as to the 15 U.S.C. § 1114 claim, the common law trademark claim, and the state law right of publicity claim. The two remaining claims were tried to a jury between January 4 and January 20, 2011. Plaintiffs won on their interference claim, although only against A.V.E.L.A. Defendants. The jury awarded $300,000 in compensatory damages for the interference.

The jury also returned a verdict in favor of Plaintiffs on the 15 U.S.C. § 1125(a) claim with respect to all Defendants. Prior to trial, Plaintiffs had requested that a jury calculate Defendants' profits, for which Plaintiffs sought disgorgement. The district court denied this request and reopened discovery after trial for submission of evidence of A.V.E.L.A.'s, Jem's, and Freeze's profits from Marley merchandise. Subsequently, the district court assessed A.V.E.L.A.'s net profits at $348,543.00; Jem's at $413,638.29; and Freeze's at $19,246.54. On July 3, 2012, the district court entered judgment against A.V.E.L.A., Jem, and Freeze in these amounts.

Plaintiffs also moved for attorneys' fees, and the district court ordered A.V.E.L.A. Defendants to pay $1,518,687.94.

Defendants appealed the judgment. A.V.E.L.A. and Freeze additionally appealed the award of profits, and A.V.E.L.A. Defendants also appealed the order to pay attorneys' fees. Plaintiffs appealed the order granting summary judgment on the right of publicity claim, the order granting judgment as a matter of law on their punitive damages claim, the order awarding profits, and the order awarding attorneys' fees. All of these timely appeals were consolidated.

We have jurisdiction under 28 U.S.C. § 1291.

DISCUSSION

I. The district court did not err in denying the renewed motion for judgment as a matter of law on Plaintiffs' false endorsement claim.

This case presents a question that is familiar in our circuit: when does the use of a celebrity's likeness or persona in connection with a product constitute false endorsement that is actionable under the Lanham Act? We conclude that the evidence presented at trial was sufficient for a jury to find Defendants violated the Lanham Act by using Marley's likeness. Our narrow holding relies on the familiar principles that underlie celebrity false endorsement claims, and we reject Defendants' contention that the application of those principles results in a federal right of publicity.

Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) provides in relevant part:

Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any ... name, symbol, or device, or any combination thereof ... which ... is likely to cause confusion, or to cause

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